Powell Speech Anticipation Lifts Stocks Amid Rate Cut Hopes

Asian shares reached a one-month high as investor optimism grew ahead of Federal Reserve Chair Jerome Powell's speech, with Japan's Nikkei rising despite a stronger yen. US stocks closed higher on Monday, continuing their largest weekly percentage gain of the year, as markets await signals on potential rate cuts. Meanwhile, China's central bank left its benchmark lending rates unchanged, limiting Beijing's ability to ease monetary policy further.

Equities

The FTSE 100 rose by 0.6% on Monday, led by gains in the mining sector as prices of both base and precious metals increased. Precious metal miners jumped 2.4% amid a rally in gold prices, which traded above $2,500 per ounce. Industrial metal miners also saw a 2.1% rise following a two-and-a-half-week high in copper prices, spurred by signs of improving demand from China and a weaker dollar. Among individual stocks, Barratt Developments climbed nearly 4%, topping the FTSE 100 gainers, after the competition regulator waived a condition for its acquisition of Redrow, allowing the deal to complete legally this week.

On the other side of the Atlantic, US stocks also moved higher, extending their rally. The Nasdaq led the gains, up 1.39%, boosted by strong performances from tech giants Nvidia, Microsoft, and Alphabet. The S&P 500 followed with a 0.97% increase, and the Dow Jones added 0.58%.

Advanced Micro Devices (AMD) saw a significant rise of 4.5% after announcing plans to acquire ZT Systems for $4.9 billion, aiming to enhance its artificial intelligence capabilities and better compete with Nvidia. Meanwhile, B. Riley Financial continued its decline, falling 5.8% after last week's sharp drop of over 65%. This followed an offer from co-founder and co-CEO Bryant Riley to buy the bank after it reported a potential loss linked to its investment in Vitamin Shoppe-owner Franchise Group.

Forex & Commodities

The US dollar fell to a seven-month low on Monday, with the dollar index down 0.56% to 101.89. The Japanese yen strengthened, reaching its highest level in more than a week at 146.66 per dollar, driven by expectations that the Federal Reserve might start cutting interest rates in September. Traders are closely watching Federal Reserve Chair Jerome Powell’s upcoming speech at Jackson Hole, which could signal whether a 25 or 50 basis point rate cut is likely.

In commodities, gold prices remained steady near record highs, with spot gold at $2,503.05 per ounce, just below its all-time high of $2,509.65. The precious metal has gained over 20% this year as investors anticipate rate cuts from the Federal Reserve, bolstered by central bank buying and safe-haven demand.

Oil prices declined significantly, with Brent crude falling $2.02, or 2.5%, to $77.66 a barrel, and US West Texas Intermediate crude dropping $2.28, or 3%, to $74.37 a barrel. The decline followed optimism over Middle East peace talks, which could reduce supply risks, and concerns about China's weakening economy, which may curb demand.